With so much of the year still ahead, the idea of business planning for the next one may not have even had a chance to occur to you yet. However, as early as it may seem, there's no time to lose. Here are some of the reasons you may want to begin forecasting for 2019 now.
The benefits of early forecasting
As much as you may want to argue that the new year is still a while away, that time can pass in the blink of an eye. You don't want to leave your small business forecasting for 2019 too late. The end of the year can be hectic on many levels, from school holidays, to Christmas, and everything else in between. Juggling these busy months can mean that before you know it, the fireworks are announcing the new year, and your forecast is still nothing more than a resolution.
Making sure you find the time isn't the only reason that business owners should be working on their 2019 forecast. Until the end of the year, market trends, federal budgets, and a whole lot of other projections for 2019 are going to begin appearing. Having a grasp on what possible growth your business is going to experience, and the cash flow that goes along with it, means that you can figure out how these things are going to affect you. And with a forecast in place, you have something to base a strong business development plan around.
Until 30 June 2019, small businesses can instantly write off up to $20,000 in assets.
It also means you can prepare to make the most of certain trends or opportunities that you may have missed otherwise. For example, until 30 June 2019, small businesses can instantly write off up to $20,000 in assets. If your forecast shows that you'll need to invest in more gear to keep up with future growth, you can organise to make these purchases before the end of June to benefit from the asset write off.
Should the forecast not show a good year ahead for your company, finding out early means time to investigate where business is going wrong, and tighten up your budget to help tide through the tough times ahead.
Having a forecast in place can also renew your long-term focus, and help you keep track when navigating the holidays and the crossover to the new year. And if you are a new business, it can provide you with direction, and an idea of what to expect.
What to focus on
Cash flow and sales forecasting can provide a lot of insight, if you know what to focus on.
With one in place for 2019, you can examine any cycles that the business goes through. Is summer when sales boom? And what months can you expect the downturn to begin affecting your company? Or do you not need to prepare for a downturn, but need to keep your business steady along with your sales during the year?
An early forecast can give you plenty of time to save if you know you are going to need a decent amount set aside to invest in a new asset, or begin looking for ways to get more stock at a better price if sales are expected to rise but purchasing costs are going to undermine that growth. Similarly, if the company's cash flow forecast shows that there could be a problem with funding, having extra time to research loans and find the best deal for your business could save you stress and money.
— Tim Reed (@TimReedMYOB) September 27, 2018
Knowing that your company is likely to grow is important as well. Extra motivation and positive outlook may come with growth, but it also requires a strong infrastructure that can support it. Don't get caught out, and have your growth stunted, by finding out half way through that the systems used in the business doesn't scale well. And if new staff are going to be required, knowing to hire them early means avoiding having the extra pressure of trying to train them while managing the additional workload.
The last area to focus on is what the forecast predicts for tax purposes. Being able to prepare for what you will need to pay takes the sting out of the tax return when it arrives.
Don't forget to talk to your accounting firm about what your small business forecast for 2019 is showing. They should be able to give you strong insights to what it means for your company, and help you prepare for the coming year.
If you want to get an early start on making 2019 a year of growth and progress for your company, reach out to WMC Accounting. With a long history behind us of assisting companies in creating forecasts, and working with them to achieve goals over the long run, we're here to help you prepare for the year ahead.